First Look at Q1 Economic Growth Weekly Update – May 4, 2015

Image courtesy of FreeDigitalPhotos.net/cooldesign

Image courtesy of
FreeDigitalPhotos.net/cooldesign

Markets fell last week as investors digested lukewarm economic data and considered future economic growth prospects. However, stocks bounced back on Friday and trimmed their losses. For the week, the S&P 500 lost 0.44%, the Dow slid 0.31%, and the NASDAQ dropped 1.70%.1

Last week, investors got their first look at Q1 economic growth. The advance estimate of Gross Domestic Product showed that the economy basically ground to a halt in the first quarter, growing just 0.2%. Though this early report is based on incomplete data, the picture so far shows that exports plunged, businesses slashed spending, and consumers kept their pocketbooks closed.2

While some of the weakness is due to a cold winter and a West Coast port strike, the effects of a strong dollar and weak global demand may linger into the second quarter. So far, we know that consumer spending edged upward in March and that wages increased in the first quarter, giving Americans more money to spend.3

The Federal Reserve’s policy-setting Open Market Committee also met last week to take stock of the economy and discuss future interest rate policy. As expected, the central bank made no moves to raise rates and emphasized that any future rate hikes will be based on a careful analysis of the economic environment. Bottom line: It’s unlikely that rate hikes will come before the fall.4

Can markets sustain the rally amid sputtering economic growth? We can’t know for sure, but we are keeping a close eye on factors like business investment, corporate expectations, and future economic growth projections to guide our decision-making process. While fundamentals show that the economy is still growing, obstacles like weak business investment, cautious spending, and global growth concerns may lead to a market pullback in the coming weeks and months.

Since the bottom of the last bear market in 2009, the S&P 500 has returned over 200%.5 Though we’ve had some bumps in the road, we haven’t experienced a serious 10%+ correction since 2011.6 Some analysts believe that we are overdue for pullback while others have a brighter outlook on market performance.7 Since history never repeats itself exactly, we don’t believe it’s useful to worry about what might be around the corner. Instead, we focus on creating personalized strategies that pursue our clients’ goals and then make prudent adjustments as conditions warrant.

ECONOMIC CALENDAR:

Monday: Factory Orders

Tuesday: International Trade, ISM Non-Mfg. Index

Wednesday: ADP Employment Report, Productivity and Costs, Janet Yellen Speaks

9:15 AM ET, EIA Petroleum Status Report

Thursday: Jobless Claims

Friday: Employment Situation

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HEADLINES:

Weekly jobless claims plummet. The number of Americans filing new claims for unemployment benefits, an indicator of layoffs, fell to the lowest level since 2000. These numbers suggest that the weak March jobs report was a seasonal aberration.8

April consumer sentiment at 2nd highest level since 2007. A monthly indicator of consumer sentiment rose last month as Americans became more optimistic about current and future conditions. Though consumers are worried about interest rates, they are more confident about jobs and income prospects.9

Motor vehicle sales driven by trucks and SUVs. Cheap gas appears to have reignited Americans’ love affair with big vehicles; though April is typically a slow month for auto sales, demand for sport-utilities and trucks accounted for about half of April’s sales.10

Manufacturing growth slows in April. Though the manufacturing sector is growing, the pace of growth fell last month to the slowest pace in almost two years. Though new orders are up (a good sign for future growth), employment is down to its lowest level in five years.11

How a Few Key Players Boosted Performance This Week Weekly Update – April 27, 2015

Image courtesy of FreeDigitalPhotos.net/renjith krishnan

Image courtesy of
FreeDigitalPhotos.net/renjith krishnan

Markets rallied last week, lead by a surge in tech stocks that brought the NASDAQ and S&P 500 to new record closes. For the week, the S&P 500 gained 1.75%, the Dow grew 1.42%, and the NASDAQ added 3.25%.1

After weeks of uncertainty, markets shook off the doldrums and rallied on the back of earnings beats from market heavyweights. Without any major economic events having occurred last week, market performance was driven by reactions to the earnings reports of a few key players.2

Have earnings reports justified the stock market’s reaction? Not really. Right now, it seems as though expectations going into earnings season were so low that any positive news was greeted with cheers. While total profits for 202 S&P 500 companies were up 8.7% over first quarter 2014, revenues were essentially flat. Weak revenue numbers indicate that companies struggled with slow demand last quarter and achieved profitability through cost-cutting measures. Looking ahead at the rest of earnings season, some analysts project that overall earnings for S&P 500 companies will be flat on 5.1% lower revenues.3 Worse, currency headwinds from a strong dollar and global economic issues may affect demand in the second quarter as well.

The week ahead is packed with important economic events: a Federal Reserve Open Market Committee meeting, the first estimate of Q1 economic growth, and a raft of company earnings reports. No interest rate changes are expected at the Fed’s policy-setting meeting, but officials may clarify their thoughts on first quarter economic performance.

Right now, the future timing of rate changes is anyone’s guess. Economists are focusing on determining how much of weak first quarter data is weather related and how much was due to lingering economic forces like a strong dollar and soft global growth. Though a June rate hike isn’t off the table, some Fed officials are hinting that higher interest rates might come later in the year.4 With respect to markets, we can expect further volatility as investors digest earnings reports and economic data.

A special security note:

Due to a global increase in financial identity theft and email hacking, please do not send confidential information such as social security numbers, EIN, DOB, account numbers or any other sensitive data via email.  Also, please do not email trade requests as they cannot be acted upon without verbal communication and confirmation. For security reasons, we need you to reach out to the office directly regarding these matters.

ECONOMIC CALENDAR:

Monday: Dallas Fed Mfg. Survey

Tuesday: S&P Case-Shiller HPI, Consumer Confidence

Wednesday: GDP, Pending Home Sales Index, EIA Petroleum Status Report, FOMC Meeting Announcement, 2:00 PM ET

Thursday: Jobless Claims, Personal Income and Outlays, Employment Cost Index, Chicago PMI

Friday: Motor Vehicle Sales, PMI Manufacturing Index, ISM Mfg. Index, Consumer Sentiment, Construction Spending

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HEADLINES:

Weekly jobless claims rise for third straight week. Though the number of Americans claiming new unemployment benefits rose again last week, the underlying trend shows that the labor market is improving. Seasonal issues like school breaks and Easter holidays tend to make numbers more volatile this time of year.5

Tight housing supply holding back market. A limited number of homes for sale is keeping back a spring surge in the housing market. Nearly three-quarters of the available homes for sale are “stale” and have sat on the market for more than a month with little buyer interest. High prices may be turning off prospective buyers.6

No Greek deal in sight. As the deadline to a Greek debt bailout edges closer, no permanent solution is emerging. Greece is having trouble repaying loans to Eurozone creditors, and lenders warned Friday that no fresh aid will come unless the cash-strapped nation agrees to serious economic reforms.7

Oil prices diverge. Though U.S. crude oil prices fell on worries of another production glut, international Brent crude prices rose to 2015 highs as fighting in Yemen threatened supplies. This push-pull in prices makes it hard for analysts to predict the direction of prices.8

Earnings Season Is Still Young: Here Are the Facts Weekly Update – April 20, 2015

Image courtesy of FreeDigitalPhotos.net/Stuart Miles

Image courtesy of
FreeDigitalPhotos.net/Stuart Miles

Events in China and Europe triggered a modest worldwide sell-off last week, and lackluster corporate earnings in the U.S. contributed to market doldrums. For the week, the S&P 500 fell 0.99%, while the Dow and the NASDAQ both lost 1.28%.1

Investors sent stocks lower early in the week as they grappled with revenue growth problems in first quarter earnings reports. Nearly three-quarters of the S&P 500 companies that have reported earnings so far have beat profit expectations, but fewer than half of those companies have exceeded revenue expectations.2 These results mean that firms are overcoming weak demand by carefully managing their expenses. Even so, cost cutting has its limits if sales don’t eventually pick up.

However, earnings season is still young, and several big-name U.S. firms are scheduled to report this week. Once firms such as Morgan Stanley [MS], Amazon [AMZN], Boeing [BA], and General Motors [GM] release their data, investors may have a better view into whether markets will snap back from last week’s fall.

U.S. investors got nervous last week when fears that Greece will exit the euro (the so-called Grexit) rose again after negotiations faltered between Greek leaders and creditors. A Greek exit from the euro would likely have serious consequences for the rest of the Eurozone. Both sides must come to an agreement soon if Greece is to avoid defaulting next month on loans. In response to the tension, bond yields on Greek debt rose and European stocks suffered their biggest fall since the middle of January.3,4

Meanwhile, new stock trading rules in China sparked more investor concerns. Chinese regulators introduced new rules banning some kinds of high-margin trading. Higher margins put traders at risk of greater losses if stock markets drop. China wants to protect an equity market that may be overheating and an expanding economy that may be cooling off.5

This week, investors are looking forward to a heavy flood of earnings reports as first-quarter earnings season kicks into high gear. Though it’s too early to predict overall earnings, the tough growth picture – largely due to headwinds from the strong U.S. dollar, weak overseas growth, and low oil prices – may make it hard for companies to beat their revenue expectations.

ECONOMIC CALENDAR:

Wednesday: Existing Home Sales, EIA Petroleum Status Report

Thursday: Jobless Claims, PMI Manufacturing Index Flash, New Home Sales

Friday: Durable Goods Orders

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HEADLINES:

Rising gas prices nudge inflation up. The consumer price index, an indicator of inflation, increased 0.2% in March, thanks to higher oil and gas prices, although it’s still down 0.1% for the past 12 months. The slight rise suggests inflation may start heading toward the Federal Reserve’s 2.0% target, if the strong U.S. dollar doesn’t stand in its way.6

Consumer sentiment rises. An early measure of consumer confidence was higher in April than in March, surpassing economists’ expectations and indicating that Americans may be more optimistic about their prospects this quarter.7

Homebuilders feel more confident. An index that tracks expectations of future home sales reached its highest level of the year in April, slightly beating expectations. Job growth and low interest rates are likely contributing to homebuilder optimism about the housing market.8

Retail sales rebound in March. After a slow start to the year, retail sales rose 0.9% in March as Americans went shopping. Higher motor vehicle, furniture, and clothing sales show that the consumer sector is still strong, potentially raising first quarter economic growth numbers.9

Fresh Data Suggestions: Economy Still On Track Weekly Update – April 13, 2015

Image courtesy of FreeDigitalPhotos.net/suphakit73

Image courtesy of
FreeDigitalPhotos.net/suphakit73

Stocks ended the second week of the new quarter on a high note, giving the Dow its first close over 18,000 for the month. Investors took confidence from some major corporate deals as well as fresh data that suggests the economy is still on track.1 For the week, the S&P 500 added 1.70%, the Dow grew 1.66%, and the NASDAQ gained 2.23%.2

With earnings season in focus, investors have temporarily put Fed worries and economic issues on the back burner in favor of seeing how U.S. businesses performed last quarter. Thomson Reuters analysts predict that S&P 500 companies saw their profits decline by 2.9% from Q1 2014.3 Falling oil prices and a strong dollar likely chipped away at energy company earnings as well as those of firms that depend on overseas sales (and had to convert profits back into dollars).

Earnings estimates have come down sharply in recent months. In the chart below, you can see that for the past year, the trend has been for earnings expectations to start relatively high (in blue), drop significantly as the quarter proceeds (in red), and then, in three of the last four quarters, exceed expectations (in green).4

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Corporate managers have an incentive to set the bar low so that they can over-deliver on earnings and reap the reward as investors react positively to the news. However, past performance is no guarantee of future return, and we’re not guaranteed to see positive earnings surprises this season. The size of negative earnings revisions is unusually large as companies were forced to account for slower economic growth and volatile oil prices. However, we can remain hopeful that the historical trend will hold.

As we look toward the official start of earnings season this week, we can count on seeing some winners and losers. While energy companies will likely be hit hard by petroleum prices, financial firms and medical firms may see outsized performance. Though we can’t predict the market, we can stay alert for opportunities amid the potential volatility.

ECONOMIC CALENDAR:

Monday: Treasury Budget

Tuesday: PPI-FD, Retail Sales, Business Inventories

Wednesday: Empire State Mfg. Survey, Industrial Production, Housing Market Index, EIA Petroleum Status Report, Beige Book, Treasury International Capital

Thursday: Housing Starts, Jobless Claims, Philadelphia Fed Business Outlook Survey

Friday: Consumer Price Index, Consumer Sentiment

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HEADLINES:

Wholesale inventories edge up in February. Warehouse stocks of products for sale rose slightly in February, indicating that businesses may not be restocking aggressively because of weak sales.5

Import prices fall in March. The cost of imported goods fell last month as rising oil costs were offset by declining prices elsewhere. Import prices are a major contributor to inflation calculations and weak inflation may delay the Fed’s interest rate increases.6

Weekly jobless claims rise less than expected. The number of Americans filing for new unemployment benefits rose slightly last week, bringing the four-week average to the lowest level since 2000. These numbers suggest that the slow job growth in March was a seasonal fluke.7

Oil prices stabilize on production plateau. Global oil prices rose for the fourth straight week on expectations that drilling production will stabilize and the supply glut will recede. The number of oil rigs in the U.S. has dropped significantly, indicating that domestic production may be topping out.8

Hixon Zuercher April 2015 Monthly Video Update

Stocks End Q1 Flat Weekly Update – April 6, 2015

“Image courtesy of FreeDigitalPhotos.net/hywards

“Image courtesy of
FreeDigitalPhotos.net/hywards

After a volatile winter, stocks ended the quarter about where they started. Oil prices, a strong dollar, and concerns about interest rates contributed to the volatility and uncertainty remains as we enter the second quarter. For the quarter, the S&P 500 gained 0.47%, the Dow lost 0.32%, and the NASDAQ gained an outsized 3.68%.1

What are some of the factors that affected market performance in Q1?

Economic growth data suggested that the economy might have slowed at the beginning of the year. After a strong third quarter of 2014, the economy lagged in the final three months of the year, clocking in just 2.2% growth. Overall, the economy grew 2.4% in 2014, up from 2.2% in 2013.2  While we don’t have official first quarter GDP numbers, unofficial estimates suggest that economic growth may have ground to a halt in the first quarter.

Though 0.0% GDP growth isn’t great news, keep in mind that the economy shrank 2.1% in the first quarter of 2014 and then rebounded to grow 4.6% in the second quarter and 5.0% in the third quarter.3 There’s no guarantee that we’ll see a repeat of last year’s trend, but warmer spring weather may translate into stronger consumer spending and housing market activity.

Much of the slowdown in growth can be attributed to the effects of the strong dollar and weak oil prices. While cheap oil is a windfall to U.S. consumers who benefit from lower pump prices, volatile prices are hitting domestic oil producers hard. The strong U.S. dollar, which gained over 15.0% on the euro last quarter, has also affected demand for U.S. products.4

Investors were also concerned about weak overseas growth, which is affecting corporate profits. The U.S. economy has disengaged from global growth and is leaving many other economies behind. Though domestic demand is strong, lagging economic growth in Europe and other economies is complicating the global growth picture. However, the European Central Bank has stepped up to undertake its own quantitative easing program and we can hope that Eurozone growth will accelerate.5

The labor market continued to make important strides last quarter, adding over half a million new jobs. The overall unemployment rate dropped to 5.5% – the lowest rate in six years. Wage growth also picked up as employers were forced to offer higher pay to attract workers.6 However, the March jobs report shows that the economy created just 126,000 new jobs, less than half of February’s gain and the smallest gain in over a year.7 Was March just an off month because of oil prices and a cold winter? That’s the question the Fed will need to answer as it ponders future interest rate moves.

What could act as headwinds in the weeks and months to come?

The Federal Reserve has been a big player over the last few months and speculation around future monetary policy decisions will likely cause market volatility in the coming weeks and months. Now that economy-stimulating bond purchases have ended, the Fed is planning to raise interest rates sometime this year. Though March’s disappointing jobs report may give Fed economists pause for thought, interest rate changes may cause investors to get nervous. We know that the Fed is carefully monitoring data and will make only gradual changes to rates, so we can hope that market reactions will be brief.

Markets are running high, with the S&P 500 closing within 5.0% of its all-time high for 56 of the 61 trading days last quarter. Such strong investor optimism can sometimes presage a pullback as investors pause to take stock of the market environment. Is a pullback certain? Certainly not. We don’t have any way to predict what will happen so we focus on setting reasonable goals, managing risk, and keeping a careful eye on market movements.

Bottom line: Though many domestic economic fundamentals are strong going into the spring, weak oil prices, a resurgent dollar, and stagnant overseas growth could cloud the picture. As Q1 earnings trickle in, positive surprises could translate into additional market upside. However, earnings estimates have come down in recent weeks and corporate profits may be affected by rising wages and slower growth.8

Since we can’t know where markets are going with any certainty, we recommend staying focused on your long-term goals and keeping short-term performance in perspective. We are continuously monitoring markets and are prepared to make changes as conditions warrant.

If you have any questions about your investment strategy, please give us a call. We’d be delighted to discuss it with you.

ECONOMIC CALENDAR:

 

Monday: ISM Non-Mfg. Index

Tuesday: JOLTS

Wednesday: EIA Petroleum Status Report, FOMC Minutes

Thursday: Jobless Claims

Friday: Import and Export Prices, Treasury Budget

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HEADLINES:

Consumer spending flat in February. Spending by U.S. consumers barely moved in February as savings levels rose to their highest levels in more than two years. While this may affect economic growth in the first quarter, it may bode well for future spending.9

Motor vehicle sales edge upward in March. Consumer demand for new vehicles picked up slightly last month. Sales were driven largely by demand for foreign cars and big trucks and SUVs from domestic manufacturers.10

Factory orders surge in February. Despite the strong U.S. dollar, new orders for manufactured goods unexpectedly rose 0.2% in February after six straight months of declines. Excluding volatile transportation orders, factory orders rose 0.8%.11

U.S. trade deficit narrows. The gap between imports and exports narrowed in February as a strong dollar and a labor dispute at one of America’s main ports affected trade. The small deficit may raise first quarter GDP estimates.12

Stocks Retreat Ahead of Earnings Weekly Update – March 30, 2015

Image courtesy of FreeDigitalPhotos.net/krishnan

Image courtesy of
FreeDigitalPhotos.net/krishnan

Markets lost ground again last week, giving up most of the previous week’s gains as investors tread water ahead of earnings season. For the week, the S&P 500 lost 2.23%, the Dow fell 2.29%, and the NASDAQ dropped 2.69%.1

Though markets were choppy all week, stocks closed slightly higher on Friday after remarks by Federal Reserve Chair Janet Yellen reassured investors that the path to higher interest rates would be gradual and data-driven.2 Investors also got a look at the final Q4 Gross Domestic Product (GDP) reading, which showed that the economy grew just 2.2% in the last three months of the year.3 While this isn’t a bad number by any stretch, economic growth cooled significantly from the 5.0% growth seen in the third quarter.4 Overall, the economy grew 2.4% in 2014, up from 2.2% in 2013.5

Investors care about GDP reports because they provide the most comprehensive scorecard about the overall health of the economy. Since healthy economic growth helps boost corporate profits, over the long run stock market performance tends to mirror economic performance. In the short term, as we have seen, markets can behave unpredictably even during periods of positive economic growth.

Digging deeper into the GDP data, we see that strong consumer spending, exports, and business investment were strong last quarter. However, the economy cooled because of higher imports and lower federal government spending.6 Bottom line: The economy was fundamentally on very stable footing at the end of the year. Though we don’t have first quarter GDP numbers yet, it’s clear that the Fed feels comfortable enough about the economy to think about raising rates.

The holiday-shortened week ahead is packed with important economic data and marks the end of the first quarter. Analysts will be looking particularly closely at Friday’s March jobs report, which will add fuel to the debate around when the Fed will raise interest rates. A report that shows healthy improvement in the labor market might signal that the economy is robust enough to withstand rate hikes. We expect markets to remain volatile going into earnings season as investors wait to see how U.S. companies did in the first three months of the year.

ECONOMIC CALENDAR:

Monday: Personal Income and Outlays, Pending Home Sales Index, Dallas Fed Mfg. Survey

Tuesday: S&P Case-Shiller HPI, Chicago PMI, Consumer Confidence

Wednesday: Motor Vehicle Sales, ADP Employment Report, PMI Manufacturing Index, ISM Mfg. Index, Construction Spending, EIA Petroleum Status Report

Thursday: International Trade, Jobless Claims, Janet Yellen Speaks 8:30 AM ET, Factory Orders

Friday: Employment Situation, U.S. Stock Market Closed

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HEADLINES:

Durable goods orders drop in February. Orders for big-ticket manufactured goods like cars, electronics, and appliances sank 1.4% last month. The drop indicates that U.S. companies were cautious about weak global demand.7

Consumer sentiment falls in March. A measure of confidence among U.S. consumers fell, indicating that Americans may be worried about their prospects this quarter.8

Existing home sales rebound less than expected in February. While sales rose last month, a persistent shortage of available properties restrained selling activity. Though warmer weather should boost sales, higher prices stemming from low housing inventory might curb buyers’ appetites.9

New home sales jump in February. Sales of new single-family homes surged last month to the highest level in seven years. The rush of sales despite the cold winter is a hopeful sign for the housing market.10

Are You Mentally Prepared for Retirement? How to thrive before and after the transition

GetImageThis week, my family and I had the opportunity to celebrate the life of a truly great person, my mom.  On March 22, 2011, after a short battle with depression, she chose to end her life at a very young age of 61.  While thoughts and feelings continue to swarm in my mind, I’m truly convinced that one of the main reasons for this tragedy was her lack of preparedness for retirement.  She had been a nurse her entire career, and as such she was truly depended upon and needed in many people’s lives.  Upon retirement, the feeling of being needed diminished, and her mind spiralled downward from there.

Retirement is about much more than money.  It’s also about finding a new path in life and a new identity as a retiree.

For most investors, retirement is their primary financial goal. As financial professionals, we help our clients chart a course to get them to retirement. We work together with our clients to answer financial questions like: When can I afford to retire? How much money will I need to live comfortably? Surveys show that many Americans are woefully unprepared for retirement and financial worries can make the retirement transition stressful.1 Fortunately, working with a professional can help ensure that you enter retirement with confidence in your financial future.

But having the means to retire after a lifetime of hard work and smart financial decisions is not all it takes to enjoy the next phase of your life. Many people overlook the fact that retirement is a major life transition that can come with significant mental and emotional ramifications. In this post, I discuss some of the critical non-financial issues that retirees must confront, and present some solutions suggested by psychologists who have studied the experiences of retirees.

Retirement can leave you feeling lost

There’s more to retirement than financial and logistical concerns. Many new retirees are unprepared for the psychological aspects of the transition. “People go into retirement essentially flying blind,” says Dr. Robert P. Delamontagne, author of The Retiring Mind® book series. In his research, Delamontagne found that people often aren’t mentally prepared for the retirement transition and don’t fully grasp what retirement will mean for their identity and place in the world.

Studies show that retirement can improve psychological wellbeing by removing the strain of a demanding career.2 However, the corresponding loss of work relationships, career identity, and daily purpose can cause retirees to feel adrift. Dr. Nancy K. Schlossberg, a former professor of counseling at the University of Maryland and author of Revitalizing Retirement: Reshaping Your Identity, Relationships, and Purpose, points out that a career “is such a part of your identity that people can feel very much at sea when they retire.”

This loss of a career-oriented identity is key, Schlossberg explains; “when you make a major change, your identity – who you are – is at stake.” Until retirees find a new identity in retirement and develop a new sense of purpose, they may struggle with feelings of loss and depression. Research supports this view; a meta-analysis of multiple studies found that retirees who closely identify with their role at work or had high-stress jobs are likely to find the transition to retirement hard.3

Delamontagne found that your personality type can have a lot to do with how difficult the transition will be. Those with relaxed dispositions can more easily roll with the punches and adapt to the changes retirement brings. On the other hand, energetic hard-chargers and people who have invested themselves in their careers often face more trouble making the transition into retirement. Reflecting on your own temperament and personality can give you insight on how to better manage your transition into retirement.

 

Who will you be in retirement?

Through interviews with over 100 retirees, Schlossberg identified six different paths that retirees often take to create their retirement lifestyle. For example, continuers usually adapt their existing skills and interests to retirement, often volunteering or working part-time in the same or a similar career field. Research suggests that many retirees aren’t ready to hang up their spurs altogether and instead choose to embark on encore careers. A 2013 CareerBuilder survey found that 52 percent of workers 60 and over planned to work part-time once they retired.4

Adventurers take retirement by the horns by learning new skills and working on their bucket list. They are the retirees who become dedicated RVers or devote themselves to new passions. Many retirees start out as searchers who are looking for their new path. If you find yourself here, you may benefit from career counseling and support to find a new direction. Others become retreaters who withdraw from active life; while some retreaters just need a temporary timeout to figure out their next steps, others can become depressed and confused.

Schlossberg found that retirees “don’t stay on the same pathway forever” and instead shift from one path to another as their needs and interests change.

Don’t be in too much of a rush to find the perfect retirement; what engages you at one point may no longer be practical five or ten years down the line. Delamontagne recommends gradually easing into your new retirement lifestyle before making any drastic changes. If you find yourself itching to move or buy a vacation house, try it out temporarily before committing yourself, and your finances, to a serious life change.

Whatever path you take in your retirement, it’s critical to find a purpose and decide what role you want to take on as a retiree. Whether it’s working part-time, volunteering for a cause, or pursuing a new passion, studies show that retirees who are actively engaged in their lives report greater levels of physical and psychological wellbeing.5

 

How will your relationships change in retirement?

Many retirees find that key relationships change after retirement. Professional relationships are often the first to suffer. Though many maintain connections with their former colleagues, they will lose the everyday contact with their work friends as retirees move on to a new stage of life.

People who socialized regularly with their professional connections may find it especially difficult to lose the camaraderie of the workplace. Schlossberg recommends that retirees find alternative social outlets through church activities, community groups, and hobbies. Building a substitute community and support network can help diminish the loss of professional relationships.

Your relationship with your spouse or partner will also likely change as you both adapt to a new schedule and retirement lifestyle. Many couples don’t retire at the same time, causing the joint transition to retirement to potentially take longer. One study found that couples often experience conflict when one retires while the other remains working. Researchers pointed to expectations about the division of housework and transition-related stress as common sources of conflict.6

Delamontagne zeroes in on “marital compression” – the sudden increase in togetherness that retired couples may experience – as a key cause of discord. Most married couples are accustomed to being apart for hours every day and enforced closeness can turn minor issues and personality quirks into real problems.

Delamontagne speaks from personal experience. After retiring from a successful career as an entrepreneur and CEO, Delamontagne found that he needed to change the way he interacted with his wife. Without the daily challenge of running a business, he unconsciously became more controlling. “One day, my wife said, ‘Stop telling me what to do! I’m not one of your employees,’” Delamontagne admits; “I didn’t even know I was doing it.”

What can you do to help your relationship adapt? “Open lines of communication,” says Delamontagne, who also recommends delving into the personalities of you and your spouse to better understand your internal motivations and how you relate to each other. Couples who have very different personalities, communication styles, and needs for independence may find more potential points of conflict. In his book, Honey, I’m Home: How to Prevent or Resolve Marriage Conflicts Caused by Retirement, Delamontagne offers suggestions and a discussion guide for opening dialogue between spouses. Couples who struggle to communicate might also benefit from the mediation of a counselor or neutral third party.

What else can you do? “Get a part-time job,” suggests Schlossberg. Whether you’re consulting in your former field, pursuing a hobby, or volunteering for a local cause, independent pursuits and time out of each other’s space can give your relationship some much-needed breathing room. Building that critical support network of friends and activity partners can also help you avoid leaning too much on your spouse for your social needs.

Relationships with children and other family members may also change when you retire. Family is often a source of joy and relaxation to retirees but the expectations of your relatives can also offer unwelcome pressure. While some retirees look forward to spending more time with children and grandchildren, others are equally interested in pursuing travel or a more independent lifestyle. Schlossberg found that many retirees feel pressured by their children to make themselves more available for babysitting duty and other family obligations rather than focusing on their own interests. The burden of these expectations can create a stressful family dynamic.

Whether you’re delighted by the opportunity to take an active role in babysitting or not, The American Grandparents Association recommends setting boundaries early on.7 Think carefully about how much time you want to devote to your family and communicate your expectations in advance; otherwise, you might find your own life taking a back seat to family requests.

 

Our take on retirement

I hope that you’ve found this article interesting and that you’ve taken away some information to apply to your own life and share with those close to you. Like many important life transitions, retirement can be both exhilarating and stressful.

As financial professionals, our job is to help you prepare for retirement and to give you the financial confidence to pursue your dreams in whatever form they take. However, we also want you to see us as a resource on other aspects of retirement. Though we aren’t psychologists, we have helped many clients negotiate important life transitions and can offer support as you work to pursue your retirement dreams. I’ve identified some resources in this article that may be helpful in your journey and would be happy to direct you to other sources of help.

Whether you’re still preparing for retirement or you are already living in the next phase of life, there’s no single solution that can guarantee a happy, successful retirement. However, our experience teaches us that advanced preparations can help reduce the stress of retiring and help ensure that you’re financially, emotionally, and mentally ready to retire. Finally, we want you to remember that retirement can offer you the freedom to reinvent yourself and pursue new passions. “Retirement never ends, it’s an ever-evolving process,” says Schlossberg. Embrace it and enjoy the life you have created for yourself.

Please feel free to share this information with your friends and family; everyone deserves the benefit of professional recommendations and the confidence of knowing that their future retirement has been planned for. If you would like to review your current retirement plan or need help developing one, please call our office at 419-425-2400.  Lastly, if you or someone you know struggles with depression, please seek medical help immediately.

 

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What Will the Fed Do Gradually? Weekly Update – March 23, 2015

Image courtesy of FreeDigitalPhotos.net/hywards

Image courtesy of
FreeDigitalPhotos.net/hywards

Markets finally snapped their three-week losing streak and rebounded as investors bought the dip and rallied after a Fed meeting. For the week, the S&P 500 gained 2.66%, the Dow rose 2.13%, and the NASDAQ added 3.17%.1

The Federal Reserve Open Market Committee met last week and issued a statement that supports future interest rate hikes. Though rates won’t come up at the next meeting in April, a June hike is possible if the economic tea leaves show continued improvement.2

What could an interest rate hike mean for markets? While we can’t predict the future, we can look backwards to see what hints history can provide. Back in June 2013, then Fed Chairman Ben Bernanke started talking about the need to gradually trim back bond-buying operations. This “taper talk” led to a brief selloff of 5% as jittery investors started worrying about how the economic recovery would survive without the Fed’s easy money.3

What’s happened since then? The Fed started tapering (wrapping up in October 2014), the unemployment rate has continued to fall, and the economy continues to expand. Since the day in 2013 that Bernanke announced his tapering intentions, the S&P 500 has gained 29.41% and has reached multiple all-time highs along the way.4

Right now, investors are experiencing similar rate hike jitters as they adjust to the new reality of higher interest rates. While we don’t know how soon the Fed will start hiking rates, we do know that they’ll do it in a gradual way. Will interest rate hikes torpedo the economic recovery? No. Will they affect short-term market performance? Probably.

We can’t control market performance. All we can do is focus on your personal goals, keep an eye on the overall environment, and stay flexible and on the lookout for opportunities that arise.

As we approach the end of the quarter, we can expect more market volatility as investors weigh the effects of another cold winter on economic growth and corporate earnings. Analysts will also be waiting for Friday’s final estimate of fourth quarter 2014 economic growth as well as follow-up comments from Fed economists who might give further insight into the timing of rate hikes.

ECONOMIC CALENDAR:

Monday: Existing Home Sales

Tuesday: Consumer Price Index, PMI Manufacturing Index Flash, New Home Sales

Wednesday: Durable Goods Orders, EIA Petroleum Status Report

Thursday: Jobless Claims

Friday: GDP, Consumer Sentiment

 

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HEADLINES:

Jobless claims hold steady. The number of Americans filing claims for unemployment benefits edged up slightly to 291,000 last week. The four-week moving average, a less volatile measure, increased to 304,750, dropping 7.5% over the last year.5

Foreclosures fall to lowest rate since 2006. The number of properties going into foreclosure fell in February to levels not seen since before the housing crisis. Since 2006 marked the peak of the housing bubble, the low in foreclosures may be an important milestone for the housing market.6

Homebuilder confidence dips in February. A measure of optimism among U.S. builders fell unexpectedly last month as construction firms worried about industry issues. However, builders are still broadly confident about housing market gains.7

Manufacturing growth slows. Though overall U.S. industrial production increased in February due to increased utility output during the cold winter, manufacturing gains have slowed over the last six months. A strong U.S. dollar may be contributing to falling overseas demand.8

We’ve Come a Long Way Weekly Update – March 16, 2015

Image courtesy of FreeDigitalPhotos.net/hyena reality

Image courtesy of
FreeDigitalPhotos.net/hyena reality

Markets ended another week down after mixed economic data, lower oil prices, and a strengthening dollar made investors nervous ahead of the next Federal Reserve meeting. For the week, the S&P 500 lost 0.86%, the Dow fell 0.60%, and the NASDAQ dropped 1.13%.1

The dollar became the focus of a lot of speculation last week when it reached multi-year highs against a weakened euro.2 The return of “King Dollar” worries many analysts because it means that foreigners can afford to buy fewer U.S. goods, depressing demand for many U.S. firms and cutting into profits. On the other hand, a stronger dollar makes imports cheaper and increases the buying power of U.S. consumers, which has been historically good for the economy.3

Speaking of history, Monday, March 9, 2015 marked the sixth anniversary of the current bull market, which began on March 9, 2009. Though markets have been turbulent in recent weeks, let’s take a moment to think about how far we’ve come since the dark days of the financial crisis. Since the bottom of the stock market, the S&P 500 has gained 203.52%, surpassing previous market highs along the way.4

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We’ve seen major improvements in economic fundamentals as well. Since peak unemployment of 10.0% in October 2009, the unemployment rate has dropped nearly in half to 5.5% as of last month. With millions of Americans back to work and contributing to the economy, economic growth has also made significant gains. From the fourth quarter of 2008, when Real Gross Domestic Product decreased at an annual rate of 6.3%, the economy has improved, reaching 5.0% annualized growth in the third quarter of 2014 and 2.2% (estimated) growth in the fourth quarter.5,6

Bottom line: Economic fundamentals have come a long way and there are plenty of factors that support continued equity growth. That’s not to say that there aren’t headwinds that may affect market performance in the future. The Federal debt debate is rearing its ugly head again in Washington as lawmakers square off about the Treasury debt ceiling, which will be breached this week.7 We’re also approaching the end of the first quarter and investors will be looking toward corporate earnings releases to see how U.S. companies performed. Markets may remain choppy as investors take stock of current fundamentals and try to predict how policy changes may affect markets.

This week, analysts will be closely watching the Federal Reserve’s two-day policy meeting, which is one of the most important we’ve had since last year. Though we don’t expect the central bank to raise rates this week, investors should know a lot more about the Fed’s plans once the meeting is over.8

ECONOMIC CALENDAR:

Monday: Empire State Mfg. Survey, Industrial Production, Housing Market Index, Treasury International Capital

Tuesday: Housing Starts

Wednesday: EIA Petroleum Status Report, FOMC Meeting Announcement, Chair Press Conference, FOMC Forecasts

Thursday: Jobless Claims, Philadelphia Fed Business Outlook Survey

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HEADLINES:

Retail sales fall in February. U.S. retail sales dropped for a third straight month, surprising many analysts who counted on job growth and cheap gasoline to boost sales. Harsh winter weather may be keeping shoppers at home, depressing retail spending numbers.9

Weekly jobless claims drop more than expected. The number of Americans claiming new unemployment benefits fell last week, erasing much of the previous weeks’ increases. Economists suspect seasonal factors are at play and that the labor market continues to improve.10

Consumer sentiment slides for fourth straight month. American consumers ratcheted back their optimism about the U.S. economy in early March, though temporary factors may be affecting data. While affluent Americans remain confident about the future, lower- and middle-income consumers are worried about their prospects.11

Weekly mortgage applications drop. A sharp increase in mortgage rates last week caused a corresponding drop in mortgage applications. Both mortgage applications and refinancing activity fell as buyers responded to higher rates.12